Congress left Washington last month without coming to an agreement on whether to extend the so-called Bush Tax Cuts for wealthy Americans. And unless they reach a compromise before the end of the year, the tax cuts will expire for everyone. So with three months to go, new estimates are out on just how much that will impact the average family. Washington Bureau Reporter Erin Billups filed the following report for NY1.
At the end of the year, the so-called "Bush Tax Cuts" are set to expire, as is the Payroll Tax Cut, the Alternative Minimum Tax, the tax breaks that were part of the 2009 stimulus bill and a series of temporary tax breaks normally extended by Congress that will also expire. On top of that, new taxes, part of the controversial federal health care bill, will go into effect.
"The fiscal cliff is gonna hit Dec. 31. Would affect millions of Americans," said North Carolina Sen. Kay Hagan.
The expiration of the cuts would cost the average middle-class family $2,000 more a year, according to the non-partisan Tax Policy Center, who says overall, taxes will rise by $500 billion in 2013. It's a problem Washington lawmakers are well aware of but building consensus to avert the fiscal cliff has been put off until after the election.
"They've actually threatened to do nothing and drive us off the fiscal cliff," House Speaker John Boehner said.
"We succeeded in passing a middle class tax cut. But once again, Speaker Boehner won’t work with us," said New York Sen. Charles Schumer.
While there are still a lot of questions surrounding the details of both President Barack Obama and Mitt Romney's tax plans, the two men have given us a sense of what they think Congress should do.
Obama said, "I also wanna make sure that the wealthiest household in America pay modestly higher taxes on incomes over $250,000."
On top of repealing the Bush Tax Cuts for just the wealthy, Obama wants to remove loopholes and exemptions that allow households making more than a million annually to pay a smaller share of taxes than an average middle class family.
“I'm going to lower the tax rates, he wants to raise them. I'll create jobs, he'll kill them," Romney said.
Romney proposes a 20 percent across the board reduction of tax rates, a 10 percent cut to corporate income tax and low rates on dividends and capital gains, which he says can be paid for by ending some tax deductions and broadening the tax base.